dations for a conservative theory of economicndevelopment. Beyond the substantialnconvergence of Bauer, Loehr andnPowelson, though, looms the philosophicalntension of their differences. What isnthe central problem of “economic development,”nand in what direction do wenseek its solution? What is the role ofnpolitics in this field, and, at the core,nwhat is the importance of the “distribution,n” or “equality,” which charge thesentides?nJbor Bauer, this question is twofold:nWhy are some people better off thannothers, and, can “aid” redistribute thenwealth between them? His response focusesnon the self-defeating consequencesnof robbing the rich to give to the poornand on the promise of thrift and enterprisenenabling the poor to becomenwealthy on their own. Given freedomnand incentives, individuals with thesentraits will prosper, so a firm but restrainedngovernment like Hong Kong’snshould insure an environment whichnnurtures enterprise. Ultimately he concludesnthat some people are better offnthan others because of “personal conduct,nnot external forces.”nFor Loehr and Powelson, the centralnquestion lies not in the flux of opportunitiesnacross a spectrum of relative prosperity,nbut rather in an absolute: then”overwhelming” burden of poverty.nThus while Bauer emphasizes class mobility,nLoehr and Powelson try to understandnstark poverty both subjectively andnobjectively—a quest that they treat withncompassion. Like Bauer they, too, discussnpersonal attributes conducive to development.nBut, in contrast, they looknfor the causes of poverty in society-wideninstitutions rather than in the capacitiesnof individuals. Unusual among economists,nthey perceive the importance ofnstructures which mediate between individualsnthemselves or between individualsnand the State: institutions whichnfoster financial tmst and group leverage,nfor instance, or “parallel governments”nwhich guard against overly centralizednpower. To them, individual enterprisencan be released only when people havenfirst acquired for themselves the classicalnliberal safeguards against all governments’n”propensity for power.” In thisnrespect they see development as beingncontingent upon factors external to thenindividual’s personal conduct.nAs a result of this difference of viewsnon social organization, these volumesndisagree even more radically about thennature and role of politics in the processnof development. Because the societynBauer depicts comprises only (or mainly)nindividuals and the State, and becausenhe (like the others) affirms the latentnpotential of the former, developmentntherefore depends on wise and wellintentionedngovernors. Hence he isnoutraged by the Third World elites’ cynicalnmanipulation of our guilt and theirncountrymen’s poverty for their own enrichment.n”Politicization” in any instancenBauer sees as a deadening cancerncaused by foreign aid, the major blightnon economic progress which diverts thenresources and attention of both the leadersnand the poor away from “productiveneconomic activity.” His volume is an exposenof political crassness, the root evil innany society whose development hingesnon enlightened government.nhave served the poor in the West—beginningnwith a more realistic appraisal ofnwhat leverage they do have (given theirndependence) and a more accurate graspnof how selectively and gradually reformsnare gained.nAs for politics within the developingnnations, far from idealizing the colonialnpaternalism of Hong Kong’s crown government,nLoehr and Powelson laud thenEuropean peoples’ fierce struggle forn”liberalism”—freedom from restrictionn—throughout their history. Throughntheir ever-persisting “politicization,”nthey hammered out institutions whichnfoster individual enterprise without reliancenon government goodwill, institutionsndesigned over time to protectnagainst government (which often provesnto be more a threat than an aid to enterprise).nThus they assert that political decentralizationnis a sine qua non forndevelopment. Their staunch acceptancenof politics as integral to economics leadsnthem to consider market economy andndecentralized politics separately. In thenfinal analysis they give priority to the latter,npredicting the stagnation of certainnfree-market societies which do not decentralize,nbut successful developmentn”[Equality, the Third World, and Economic Delusion] is the most irritating book Inhave read in a long time … a repetition of the stalest cliches of conservativeneconomics.”n—Commonwealn”Bauer’s approach—in spite ofits power and appeal—is fiindamentally flawed …”n—New York Review of BooksnOn the other hand, for Loehr andnPowelson politics and political propagandanare facts of life, with or withoutnforeign aid. Indeed, because this is true,neffective leverage against power is a prerequisitenfor economic development.nLike Bauer, they dismiss the rhetoricalndemands of the “North-South” debate;nhowever, what they criticize is not thenaassness of these demands but their futility.nThey would have the Third Worldnharness their drive for political power bynlearning the bargaining principles whichnnnfor certain decentralized socialist societiesnwithout a market economy.nThe models of society which freemarketneconomists offer us operate withnmore intellectual precision when left in anpolitical vacuum. Virtually uniquenamong economists, Loehr and Powelsonntake seriously realpolitik. This is whynthey and Bauer, economists of the samenconservative bent, end up far apart. Accordingnto Loehr and Powelson, then”commercial liberalism” which broughtnabout Europe’s brilliant developmentn•~S9nlVoÂ¥emberl98Sn